Cool Foster's sits and waits

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Foster'S Group has moved to stare down winemaker Southcorp's
shareholders by extending its hostile $4.14-a-share bid by another
two weeks, taking a punt that its stock will continue to slide with
prospects fading of a counter-bid or a bigger offer.

The extension pushes the offer period to April 14.

Southcorp's shares have fallen 11 per cent since hitting a high
of $4.76 on January 17, when Foster's announced its $3.1 billion
offer.

Analysts and fund managers said investors were selling because
they accepted another bidder was unlikely, especially with Foster's
already holding 18.8 per cent of the stock. Southcorp's shares were
likely to keep slipping.

A director of Wallace Funds Management, Michael Birch, said: "It
won't go below the bid price but it will track down to that price
or just above it."

The acting chief executive of the International Wine Investment
Fund, Rupert Clifton-Bligh, said Foster's would eventually need to
put more money on the table.

He said Southcorp was in danger of losing key staff the longer
the stalemate continued.

Southcorp has already lost investor relations manager Kristina
Devon, who has been poached by Coca-Cola Amatil.

"In a practical sense, they (Foster's) would want to have it
cleaned up because it's not in their interests to have it dragging
on," Mr Clifton-Bligh said. "It's not in the interests of Foster's
because it's distractive for management, and it's not in the
interests of Southcorp because this constant state of siege is
destructive and you will have management looking for other
jobs."

ABN Amro's David Cooke said: "Both groups need to pull
themselves back from the brink and find out how far apart they
really are.

"I think $4.25 to $4.30 might be enough, but maybe they need to
put in a scrip compo-nent for the shareholders who want a rollover
and Foster's can then do buyback to address the dilution."

Foster's chairman Frank Swan, in his letter to Southcorp
shareholders, said the offer was an "outstanding price'.'

For its part, Southcorp stuck to its guns, claiming that the
Foster's gambit was still inadequate, with only just over 1200 of
its shareholders accepting the offer.

A Southcorp spokesman said: "This takeover is clearly
unattractive to shareholders, as can be seen by acceptances of only
0.2 per cent of shareholders.

"Our shareholders are making it very clear to Foster's that they
don't think it will succeed."